Opponents of government intervention in the economy argue that government's attempts to correct informational problems:
A. will make market transactions much more efficient.
B. are not necessary since an efficiently operating market system ensures that adequate information will be provided.
C. are justified in most cases though politically difficult to implement.
D. often create greater problems, such as FDA restrictions on experimental drugs for AIDS, which could save lives.
Answer: D
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Marginal factor cost is
A) the change in the value of output from using an additional unit of the factor. B) the cost of an additional unit of output. C) the total value of factor cost divided by the one cost that is being held constant. D) the cost of using an additional unit of an input.
Excessive use of monetary or fiscal policies to achieve stabilization may:
A) require the cooperation of firms and the public in order to be effective. B) backfire if the economy becomes destabilized through erratic application. C) never be necessary as long as the economy can rely on automatic stabilizers. D) be better than weaker measures that may not hit the target.
A multiple regression model suffers from functional form misspecification when it does not properly account for the relationship between the dependent and the observed explanatoryvariables.
Answer the following statement true (T) or false (F)
The "mercantilists" of the late 1700s in Britain opposed expanding trade primarily
A) Because they wanted to protect their narrow commercial interests B) Because it reduced living standards in Britain C) Because King George III supported it and they disliked him D) Because the idea was popular in France